Thursday, January 29, 2015

Debt and the Elderly

One of the most obvious axioms of planning for retirement is that as you get older, your debts should decrease as well. It doesn't make sense to head into retirement, when your income will be dropping, with more debts to pay off. But a new study from the Employee Benefits Research Institute suggests that this is exactly what is happening.

The study reports that among households headed by people aged 55 or older, debt loads increased from 63.4 percent in 2010 to 65.4 percent in 2013. Back in 1992, that same figure was just 53.8 percent.

Certainly, way too many older folks have more debt than they should. In 2010, 8.5 percent of these older families had debt payments amounting to more than 40 percent of their income. In 2013, that had edged up to 9.2 percent, with most of the increase resulting from added housing debt. That is a dangerous situation to be in.

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